# Cost basis

Also written tax lot, tax lots, specific share identification, adjusted cost base.

*https://stockmarketstack.com/glossary/cost-basis · next to Stock Portfolio Trackers*

**Definition:** The amount a holding is treated as having cost, against which a gain or loss is computed when it is sold. It is not one number per ticker but a number per lot, per acquisition. Which lots count as sold is set by tax rules and by what you told the broker at the time, and later events adjust the figure afterwards.

## How it works

A position is made of lots. Every purchase, every reinvested dividend, every transfer in and every
stock received in a corporate action creates one, with its own date and its own price. Selling
"100 shares" therefore requires answering a prior question: which 100?

The US rules are written down, and IRS Publication 550 (2025) is where they sit. If the shares sold
can be adequately identified — the identification made to the broker at the time of sale — that
identification governs, and the basis of those specific shares is used. Where adequate identification
is not possible, the default is first-in, first-out: the oldest shares are treated as sold first.
For shares in a mutual fund or acquired through a dividend reinvestment plan, an average basis
method may be elected instead of tracking each lot. Publication 550 also carries the wash-sale
mechanism, which is a basis adjustment rather than a permanent loss: where substantially identical
stock is acquired within 30 days before or 30 days after a sale at a loss, the loss is disallowed and
the disallowed amount is added to the basis of the replacement shares, deferring it until those
shares are sold.

Three properties of that make the software question hard.

**The method is chosen at the sale, not afterwards.** Specific-share identification is an instruction
given when the shares go; reconstructing it later from a CSV is not the same act. A tool that lets
you flip the accounting method in a settings menu is recomputing a historical figure under a rule
that may not be the one that applied.

**Adjustments arrive from outside the transaction list.** Return-of-capital distributions, spin-offs,
mergers and stock distributions all move basis without a trade happening. The arithmetic is not
optional or approximate: the worked example in
[why adjusted close differs between sources](https://stockmarketstack.com/guides/why-adjusted-close-differs) shows a spin-off
where the issuer's own filing allocated 79.74 per cent of a holder's basis to one company and 20.26
per cent to the other, derived from opening prices on a named morning. A tracker that treats that
event as a price adjustment rather than a basis allocation has two wrong numbers, not one. What a
[corporate action](https://stockmarketstack.com/glossary/corporate-action) does to a basis is the part that separates a cheap
tracker from an expensive one.

**It is jurisdictional, not universal.** FIFO as a fallback and an average-basis election for fund
shares are US rules from a US document. Other regimes differ in kind, not only in rate, and a tool
that implements one country's logic is not producing a filing anywhere else.
[Sharesight](https://stockmarketstack.com/tools/sharesight) is the clearest illustration in the catalogue because it is explicit
about the boundary: it runs an Australian capital-gains report using FIFO parcel allocation and the
ATO discount method, a Canadian report built on adjusted cost base under CRA rules and New Zealand
FIF and trader reports under IRD rules, each only in a portfolio set to that tax residency — while UK
and US portfolios get a sold-securities report computed on average cost, with no Section 104 pooling
and no wash-sale handling, which the card describes as a starting point for an accountant rather than
a filing.

## Why two tools disagree about the same account

Because the method is a setting, and the settings differ. [Portseido](https://stockmarketstack.com/tools/portseido) computes
basis under FIFO, LIFO or weighted average and breaks each position into purchase lots with a basis
and holding days per lot. [Stock Events](https://stockmarketstack.com/tools/stock-events) offers FIFO or LIFO for realised profit
and loss. [Wealthfolio](https://stockmarketstack.com/tools/wealthfolio) is FIFO only — no LIFO, no weighted average, no specific
identification — and has a holdings mode that takes current positions with no history, which cannot
support a basis at all. Point three tools at one broker export and you can get three defensible
numbers.

Brokers disagree with trackers for a fourth reason: they have already applied their own adjustments.
[TradeLog](https://stockmarketstack.com/tools/tradelog) declines to build from a 1099-B precisely because the form arrives with
the broker's wash-sale adjustments already applied without saying which basis figures were changed,
and reports only positions closed in the year; it rebuilds from raw fills and reconciles gross
proceeds against the form instead. Whatever tool you use, the fills are the primary record —
[how to export your broker trade history](https://stockmarketstack.com/how-to/export-broker-trade-history) is the mechanical part.

## Why it matters here

Across [portfolio trackers](https://stockmarketstack.com/categories/portfolio-trackers) this is the field with the highest
switching cost, because it is cumulative: a basis is the whole history of a position, so a tracker
you have fed two years of transactions into holds something a new one cannot be given in an
afternoon. It is also the field where "supports tax reporting" spans everything from a configurable
lot method to an actual filing-ready form for one named country. The distinction worth reading a
help page for is which of those a product means.

None of the above is tax advice, and this catalogue is not qualified to give any. It is a description
of what the documents say the mechanism is, so that a disagreement between two screens can be
diagnosed rather than guessed at. The filing itself is a question for the tax authority's own
material or for somebody paid to answer it.

## Where you will meet this

- [Sharesight](https://stockmarketstack.com/tools/sharesight.md)
- [Portseido](https://stockmarketstack.com/tools/portseido.md)
- [Wealthfolio](https://stockmarketstack.com/tools/wealthfolio.md)
- [TradeLog](https://stockmarketstack.com/tools/tradelog.md)
- [Stock Events](https://stockmarketstack.com/tools/stock-events.md)
- [Akoya](https://stockmarketstack.com/tools/akoya.md)
- [Boldin](https://stockmarketstack.com/tools/boldin.md)
- [Delta](https://stockmarketstack.com/tools/delta.md)
- [Finviz Elite](https://stockmarketstack.com/tools/finviz-elite.md)
- [FIREproof](https://stockmarketstack.com/tools/fireproof.md)
- [Mastercard Open Finance](https://stockmarketstack.com/tools/mastercard-open-finance.md)
- [MX](https://stockmarketstack.com/tools/mx.md)

## FAQ

### Why does my tracker's gain differ from my broker's?

Almost always because the two picked different lots as sold. A tracker set to first-in-first-out and a broker holding an instruction to sell specific shares will report different gains on the same sale, and neither is arithmetically wrong. The second common cause is an adjustment one side applied and the other did not, such as a disallowed loss added to the replacement shares.

### Can a tracker that imports only my current holdings compute this?

No. A basis is a function of the acquisitions, their dates, their prices and every adjustment since, so a snapshot of what you hold today cannot produce it — at best the tool asks you to enter an average. This is why the import mode matters more than the feature list: transactions support a basis, holdings do not.

## Sources

1. [Publication 550 (2025), Investment Income and Expenses](https://www.irs.gov/publications/p550) — Internal Revenue Service, read 2026-09-21

*Last updated 2026-09-21. A reference page, corrected in place — not a dated post.*